After watching Lehman Brothers Holdings match its $1.3 billion bid on part of Denver-based Archstone, Chicago-based Equity Residential (EQR) reserved the right to buy the second half of the debt owned by Bank of America Corp. and Barclays PLC, according to a statement it filed with the Securities and Exchange Commission.

On Jan. 20, Lehman exercised its right of first offer on 26.5 percent of the Bank of America (BOA) and Barclays' stake of Archstone, giving EQR until Feb. 19 to bid on the second half of the section, also totaling 26.5 percent of Archstone. In the filing, EQR said it is “entitled, but not obligated” to buy this second piece from BOA and Barclays.

Regardless of what EQR decides to do, Alexander Goldfarb, managing director of equity research of REITs for New York–based Sandler O’Neill + Partners, thinks the maneuver says a lot about EQR. “That EQR could buy all of Archstone and only potentially lose one notch in its credit rating says a lot about EQR’s balance-sheet strength,” he says.

EQR could also get a breakup fee up to $80 million if it doesn't secure part of Archstone. “EQR has a sound strategy,” Goldfarb says. “They got the option to bid on the second tranche if they lost to Lehman on the first tranche, and if they lose to Lehman on the second tranche, EQR gets a break fee.”

Andrew J. McCulloch, a managing director for Newport Beach, Calif.–based Green Street Advisors, thinks Lehman will eventually secure the Archstone portfolio and spin it into what will be a highly anticipated IPO.

“We expect EQR to bid on the second piece but that Lehman will again exercise its right to match,” McCulloch says.

McCulloch says he thinks Lehman will eventually sell parts of the Archstone portfolio to prepare it for an IPO. “In its current form, it would be too big of an IPO,” he says. “I don’t think the post-IPO capital structure would be attractive enough to get it done. I expect them to sell off chunks of assets and begin to right-size the portfolio and balance sheet for an eventual opportunity down the road.”

That could still open up parts of Archstone for EQR and other apartment owners. “If EQR isn’t successful in securing a portion of the Archstone enterprise, there’s still a good possibility they end up with some of the assets,” McCulloch says.